SC1438

PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]

SCA NO. 72 OF 2015

BETWEEN

BARRICK (NIUGINI) LIMITED
Appellant
 
AND

JOHN TOLE POKOLI for himself as a landowner and as Chairman of Lower Porgera Landowners' Association Inc. Zone 1
First Respondent

AND

SIMON KAMBE for himself as a landowner and as Secretary of Lagaip Timbundu Zone 2 Association Inc.
Second Respondent

AND

STEWART POHMAT for himself as a landowner and as Chairman of Menmahap Village Development Association Inc. of Zone 2
Third Respondent

Waigani: Makail, J
2015: 25th & 29th June

SUPREME COURT – PRACTICE & PROCEDURE – Application for stay – Order sought to stay interlocutory injunction – Injunction restraining sale of shares of company – Appeal against grant of interlocutory injunction – Jurisdiction of single Judge to grant stay considered – Principles relevant to stay – Supreme Court Act – Section 19.

Cases cited:
 
Gary McHardy v. Prosec Security and Communication Limited [2000] PNGLR 279; (2000) SC646
Samson Jubi v. Susan Edna Fraser (2004) SC735
CL Toulik v. Andy Kuek (2006) SC876
New Britain Palm Oil Limited v. Vitus Sukuramu (2008) SC948
Bernard Steven Philipae v. Atio Igaso (2001) N4366

Counsel:

Mr. R. Bradshaw, for Appellant 
Mr. B. Lakakit, for Respondents

RULING ON APPLICATION FOR STAY

29th June, 2015

1. MAKAIL J: The appellant is the current operator of the Porgera gold mine in the Enga Province. Back in 1996, the then Minister for Environment and Conservation, The Honourable Paul Mambei issued a Ministerial Determination ("Determination") for the Lower Porgera environmental damage compensation claim under the then Water Resources Act. This Determination was a compensation package for downstream landowners along the Porgera river amongst others, for impacts caused by tailings discharge from the mine and sedimentation impacts. The Determination identified two groups of landowners to receive compensation. One group in Zone 1 and the other, Zone 2 and fixed separate rates to calculate the amount of compensation in monetary terms. It fixed a rate of K0.63 per tonne for Zone 1 tailings compensation and K0.25 per tonne for Zone 2. 

2. The Determination led to the appellant appealing to the National Court and arguing that the rates were too high. The dispute ended up in the Supreme Court where it was held that the rates were inadequate and referred it back to the Minister to make a further Determination on the appropriate rates. It appeared no further Determination was made, although there is no dispute that the appellant paid compensation based on different rates since 1996. It was not until 09th September 2014 and after numerous representations to relevant government authorities by the landowners that the current Minister for Environment and Conservation and Climate Change, The Honourable John Pundari issued a further Determination under the current Environment Act 2000 which effectively affirmed the rates fixed in the earlier Determination and for the appellant to pay the difference as outstanding compensation.

3. The respondents claimed the payment was not forthcoming. It so happened around that time too that the appellant announced its intention to sell 95% of its interest. This was the decision of the appellant's major shareholder Barrick (PD) Australia Limited. On 16th March 2015 Lakakit & Associates Lawyers on behalf of the respondents issued court proceedings in the National Court by way of originating summons seeking amongst others, an order for payment of compensation based on the rates fixed by the recent Determination. The respondents also filed a motion seeking an interlocutory injunction to restrain the appellant from selling, dealing with and/or disposing of its interest or equity ("shares") of 95% until further order. On 21st April 2015 Bradshaw Lawyers on behalf of the appellant filed a motion to dismiss the proceedings amongst others, for being an abuse of process. 

4. During one of the directional hearings before the primary judge in the National Court, there were discussions in relation to how the dispute could be resolved amicably between the parties and if mediation through the Alternative Dispute Resolution process was the appropriate forum to resolve the dispute. Parties were asked to seriously consider this option. It was also brought up during the discussion the appellant's intention to sell its shares and the move by the respondents to block it by formal orders from the Court. The primary judge's attention was then drawn to the pending respondents' motion for interlocutory injunction but it was not pursued further. Instead, the respondents asserted that the primary judge suggested the appellant give an undertaking not to sell its shares.

5. When parties returned to Court for further directional hearing on 12th June 2015, and for the parties to report on the result of the settlement negotiation, and if mediation was the way to go to settle the dispute, the primary judge was informed parties needed more time and an adjournment was necessary. The primary judge granted the adjournment until 07th July 2015 and further restrained the appellant from disposing of its shares until the matter was determined by "negotiation, mediation or trial."

6. The appeal is against the grant of an interlocutory injunction. Although an interlocutory injunction is by its very nature interlocutory, the appeal is as of right because it fell within one of the exceptions set out in Section 14(3)(b)(i)to(iii) of the Supreme Court Act. In the interim, the appellant sought an order to stay it and also stay the proceedings until the determination of the appeal pursuant to section 19 of the Supreme Court Act. Before the Court grants a stay order, it must be satisfied the order sought is within the jurisdiction of the Court or a single Judge of the Supreme Court. It was argued for the appellant that the order sought fell within the jurisdiction of a single Judge of the Supreme Court and the appellant has met the requirements for a stay set out in Gary McHardy v. Prosec Security and Communication Limited [2000] PNGLR 279; (2000) SC646. It was further argued the subject order was final to the extent that it restrained the appellant from disposing of its shares until the matter was determined by "negotiation, mediation or trial." The only course open to the appellant was to appeal it.

7. The proposition is a single Judge is vested with the power to grant a stay to prevent prejudice to the rights of the appellant pending determination of the appeal. The case of Samson Jubi v. Susan Edna Fraser (2004) SC735 was an example of a case where an order was sought before a single Judge to stay an interlocutory injunction and was refused because the appellants had failed to make out a case for grant of stay. It appears the issue of jurisdiction of a single Judge was not considered in that case because it was not an issue. For the respondents it was argued the issues raised by the appellant were matters that fell within the jurisdiction of the National Court and of which the National Court was seized of and the appellant was at liberty to raise them in that Court.

8. Section 19 of the Supreme Court Act does not confer on an appellant an automatic right of stay where an appeal is filed against a decision of the National Court but shifts the burden to the appellant to apply for an order to stay the proceedings in the National Court pending the determination of the appeal. The rationale behind this requirement is obvious. The party in whose favour a judgment is given is, entitled to its fruits. Section 19 (supra) makes reference to a Court and a Judge. In my view, there can be no doubt a single Judge of the Supreme Court has jurisdiction to grant an order for stay. The exercise of that jurisdiction is wide and covers proceedings in the National Court which are subject of an appeal. 

9. The interlocutory injunction restrained the appellant from selling its shares. If a stay order were to be granted, it would effectively stay the interlocutory injunction and restore the original status quo. The original status quo was the appellant's intention to sell its shares. In my view, the task of the full Court will be to examine the correctness of the grant of the interlocutory injunction. While that aspect is pending determination, it would be within the jurisdiction of a single Judge to grant a stay because different considerations apply. For these reasons, I am of the further view that the exercise of jurisdiction by a single Judge does not in any way usurp or conflict with the powers of the full Court.

10. The considerations relevant to an application for stay are set out in the Gary McHardy's case (supra). Apart from whether leave is required to appeal the decision (which is not relevant here), delay is relevant but is of no consequence here because the application was made promptly; soon after the interlocutory injunction was granted. From the originating summons, it is clear the respondents' claim was not about the shares, held by the shareholder of the appellant (in the appellant) but one to enforce the recent Determination. It is a monetary claim based on a Ministerial Determination under Statute. There is evidence that the appellant has accepted the recent Determination to pay the difference (compensation) calculated on the difference in the rates and was in the process of paying (identifying the correct recipients/landowners as opposed to third parties) when the respondents issued these proceedings and obtained the interlocutory injunction.

11. The appellant and more particularly its shareholder Barrick (PD) Australia Limited is more likely to suffer hardship, inconvenience or prejudice if the interlocutory injunction is not stayed. Its shareholder is likely to suffer substantial loss or damage. The respondents' concern is that the appellant is selling its shares (possibly to a Chinese company) in order to avoid its liabilities. Two of them are the outstanding compensation claims by the lower Porgera landowners. They asserted that if the shares were sold, there was no guarantee that the new shareholder would settle their claims. The impetus for this concern was the long history of the appellant and its predecessor's, as it were, inability to settle its liabilities particularly landowner compensation claims. 

12. This is an erroneous assertion. With respect, it shows a lack of understanding of the relationship between a company and its shareholder and the rights and liabilities of a company as opposed to shareholders of a company. Liabilities of a company remain and are passed on to the new shareholder after the shares are sold and transferred. Where a person or an entity buys shares from Barrick (PD) Australia Limited in the appellant, it takes on the liabilities of the appellant. That is the risk the potential shareholder takes or will take. The decision to buy shares in the appellant is a commercial decision, and it is assumed, one that is made after careful consideration of all factors including landowner compensation claims but one that is and should not be dictated by landowners.

13. The respondents' compensation claims are matters for the new shareholder to deal with. If the respondents are successful with their claims in the National Court and secure a monetary judgment against the appellant, the appellant will be obliged to settle them. If it defaults, the respondents have recourse to enforcing it. That option is open to the respondents and will be utilised when the time comes. For now, there was no evidence that the appellant was closing down its operation and leaving the country. The respondents relied on the sale of shares in the appellant as an indication of the appellant's intention to leave the country and proceeded on this erroneous notion to seek the interlocutory injunction. Their concern is speculative and goes to support the proposition that the grant of the interlocutory injunction was based on a wrong principle of law.

14. The consequence of that is the proposed sale of shares has been halted. This has the potential of driving potential shareholders away from buying shares in the appellant and when that happens, irreparable damage will occur. The appellant is a substantial mining company. One recurring theme about this case, as in any resource development projects is that, it is inevitable that there will be landowner compensation claims. Such claims are part and parcel of the operations and ongoing liabilities of any resource developer company. What has occurred in this case is one of many instances of landowner compensation claims that the appellant will have to settle at some point in time. But, it would be erroneous, to say the least, that the appellant is incapable of meeting its liabilities particularly the respondents' claims. 

15. The main ground of appeal is that the primary judge erred when he granted the subject order without hearing the appellant. It was argued for the appellant that this was in breach of the appellant's right to be heard. This right is guaranteed by Section 59 of the Constitution. The respondents argued the order was made within the discretion of the primary judge who had the benefit of hearing the parties at the earlier directional hearing about the proposed sale of shares before granting the subject order. The order was to preserve the status quo until their compensation claims were determined by the Court. 

16. In my view, it is arguable whether the order was properly made in the circumstance. One view, it could be argued, it was not because the appellant was not heard and the earlier discussion held with the primary judge was no substitute to the appellant's right to be heard before judgment was passed. It has been said that the right to be heard is fundamental and a denial of that right amounts to a miscarriage of justice: CL Toulik v. Andy Kuek (2006) SC876; New Britain Palm Oil Limited v. Vitus Sukuramu (2008) SC948 and Bernard Steven Philipae v. Atio Igaso (2001) N4366. The other view also seems plausible because what the primary judge did was appropriate in the circumstances. 

17. One other significant matter which supports the proposition advanced by the appellant is that the interlocutory injunction is effectively directed at the appellant's shareholder and restrains the shareholder Barrick (PD) Australia Limited from selling its shares. Yet it was not a party in the National Court proceedings and was not given an opportunity to be heard. This puts the appellant in a stronger position than if it were a party in the original proceedings. If the complaint against the primary judge's decision can be resolved by the primary judge, it would almost be certain that parties will be asked to return to the primary judge to deal with it. However, the wording of the interlocutory injunction, in my view, supports the proposition that it removes the appellant's right to set it aside before the same judge and the only course open to the appellant is to appeal it.

18. Irreparable damage will occur if the interlocutory injunction remains. There was no evidence of the respondents giving an undertaking to meet any damages that may arise as a consequence of the interlocutory injunction. Where no undertaking is given, it places the appellant in a precarious position as to whether the Court can hold the respondents responsible for damages in the event the proceedings are dismissed. The appellant's position is not further improved where the Court on its own volition has granted the interlocutory injunction and not requiring the respondents to give an undertaking.

19. These considerations lean towards a grant of a stay. That will be the ruling of the Court. The interlocutory injunction is stayed. However, it would be unwise to stay the proceedings in the National Court. The proceedings should be allowed to progress to trial, if not settled, by mediation. One or the other must occur because the determination of the compensation claims is not subject to the sale of shares by the appellant. It should be mentioned too that the appellant has a pending motion to dismiss the proceedings. That must also be taken into account when progressing the matter further. The order sought to stay the proceedings is refused. Directions hearing will follow to further progress the appeal. 

Ruling & Orders accordingly.
________________________________________________________________

Bradshaw Lawyers: Lawyers for the Appellant
Lakakit & Associates Lawyers: Lawyers for the Respondents